Pence v. GEE Group, Inc.

236 F. Supp. 3d 843, 2017 WL 629470, 2017 U.S. Dist. LEXIS 22180
CourtDistrict Court, S.D. New York
DecidedFebruary 16, 2017
Docket16 Civ. 6589 (GBD) (GWG)
StatusPublished
Cited by32 cases

This text of 236 F. Supp. 3d 843 (Pence v. GEE Group, Inc.) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Pence v. GEE Group, Inc., 236 F. Supp. 3d 843, 2017 WL 629470, 2017 U.S. Dist. LEXIS 22180 (S.D.N.Y. 2017).

Opinion

MEMORANDUM OPINION

GABRIEL W. GORENSTEIN, UNITED STATES MAGISTRATE JUDGE

In this lawsuit,- plaintiff Stephen B. Pence has brought claims against defendant GEE Group, Inc. (“GEE”), for which Pence formerly .served as chairman, seeking indemnification for attorney’s fees and other expenses. GEE has moved-to dismiss under the - doctrine of forum non conve-niens, or, in the alternative, to transfer the case to the Northern District of Illinois under 28 U.S.C. §§ 1404(a) - or' 1406(a).1 [846]*846For the reasons stated below, the motion to transfer the case pursuant to 28 U.S.C. § 1404(a) is granted.

1. BACKGROUND

A. Pence’s Connection to GEE

Pence is an attorney who has worked in private practice in Louisville, Kentucky since late 2007. Pence Aff. ¶¶ 2-3. During 2009, Pence worked for W. Anthony Huff and regularly traveled with Mr. Huff to New York City in connection with his work. Id. ¶ 4. During one of these trips, Pence met with representatives of GEE, including Dennis W. Baker, a former director of the company. Id ¶¶ 5-6; Baker Decl. ¶ 8.

GEE is a temporary staffing agency, providing “direct hire, contract, and contract-to-hire services.” Stuckey Decl. ¶3. Although GEE is incorporated in Illinois, “senior management runs the company from Jacksonville, Florida and Tampa, Florida.”2 Id ¶ 2. In 2009, GEE sought an outside investor, a role that Pence eventually filled by purchasing a majority of GEE’s shares using a company he controlled called PSQ. Baker Decl. ¶¶7, 14-15; Pence Decl. ¶ 8. Pence was then elected as GEE’s Chairman of the Board, serving from July 2009 to November 2010. Stuckey Decl. ¶ 7.

B. The Indemnification Agreement

As of June 30, 2009, GEE’s bylaws provided that it would indemnify all of its directors and officers who are sued in connection with their positions at GEE. See By Laws of General Employment Enterprises, Inc., As Amended Effective June 30, 2009 (attached as Ex. A. to Stuckey Deck) (“Bylaws”) Art. VIII § 1. The Bylaws provide:

The corporation shall, to the fullest extent to which it is empowered to do so by The Illinois Business Corporation Act of 1983 or any other applicable laws ... indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending!,] or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he or she is or was a director or officer of the corporation ... against all expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding.

Id. The Bylaws also declare that this provision is “a contract between the corporation and each director or officer who serves in any such capacity at any time while this article is in effect.” Id. Art. VIII § 2.

On July 9, 2009, Pence signed an Indemnity Agreement with GEE. Pence Aff. ¶ 14; Minutes, dated July 9,2009 (attached as Ex. B to Stuckey Decl.); Indemnity Agreement, dated July 9,2009 (attached as Ex. 2 to Amended Complaint for Declaratory Relief and Damages, filed Oct. 14, 2016 (Docket #25) (“Am. Compl.”)) (“Indemnity”). Pence was attending a board meeting in Oakbrook Terrace, Illinois at the time. Pence Aff. ¶ 14; Minutes. The Indemnity states that GEE will “attempt” to maintain liability insurance for those serving it and its subsidiaries, and that although GEE’s Charter and Bylaws and Illinois law provide for indemnification [847]*847rights, these rights are “not exclusive.” See Indemnity at Recitals; accord id. ¶ 17(a) (“The rights of indemnification and to receive advancement of Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Charter, the Company’s Bylaws, any agreement, a vote of stockholders or a resolution of directors, or otherwise.”). The Indemnity recites that “[Pence] does not regard the protection available under [GEE’s]- Charter, Bylaws, and insurance as adequate ... and may not be willing to serve as an officer or director without adequate protection.” Id. at Recitals. The Indemnity promises indemnification for Pence for expenses incurred in legal proceedings in which he is “a party or participant.” Id. ¶¶3-6. The Indemnity also includes the following choice of law and forum selection clause:

This Agreement and the legal relations among the parties shall be governed by, and construed and enforced in accordance with, the laws of the Stale of Illinois, without regard to its conflict of laws rules. ... [GEE] and [Pence] hereby irrevocably and unconditionally: (a) agree that any action or proceeding arising out of or in connection with this Agreement shall be brought only in an Illinois Court; (b) consent to submit to the jurisdiction of an Illinois Court for purposes of any action or proceeding arising out of or in connection with this Agreement; (c) waive any objection to the laying of venue of any such action or proceeding in an Illinois Court; and (d) waive, and agree not to plead or to make, any claim that any such action or proceeding brought in an Illinois Court has been brought in an improper or inconvenient forum, or is subject (in whole or in part) to a jury trial.

Id. ¶23. The Indemnity defines “Illinois Court” as “the Circuit Court of the Eighteenth Judicial District of the State of Illinois- or another federal or state court of competent jurisdiction.” Id. ¶2(6). Oak-brook Terrace, where the Indemnity was signed, is located in Dupage County. Du-' page County is in the Eighteenth Judicial Circuit. See 705-111. Comp. Stat. 35/1.

C. Pence’s Costs Incurred, and Indemnity Requests

At some point thereafter, the United States Attorney’s Office for the Southern District of New York began a criminal-investigation that resulted in the filing of a criminal complaint in 2010 against the president- of a bank where GEE had an account. Pence Decl. ¶ 17; Letter from Gregory Bartko, Esq., dated Apr. 26, 2010 (attached as Ex. 3 to Am. Compl.) (“Bart-ko Letter”). In an April 26, 2010, letter from GEE’s General Counsel to an insurer, GEE’s General Counsel stated that Pence incurred expenses during that investigation for which he claimed indemnification. See Bartko Letter. That letter staked: “pursuant to GEE’s' Bylaws, as amended November 19, 2007, GEE has an obligation under Article VII of those Bylaws to indemnify Mr. Pence for the costs of his defense, including the advancement of attorneys’ fees necessary to engage counsel to represent him.” Id. The letter was sent from Atlanta, Georgia, to Rolling Meadows, Illinois, with a dopy sent' to Pence by email. See id. Pence’s complaint alleges that he relied on the Bartko Letter when he hired counsel tó represent him in connection with a criminal investigation. Am. Compl. ¶ 70. However, GEE has not indemnified Pence for any of these expenses. Id. ¶ 71.

On September 9, 2015, the Securities and Exchange Commission (“SEC”) filed a civil complaint against Pence. See Complaint and Jury Demand, filed Sept. 9, 2015 (Docket # 1), in SEC v. Pence, No. 15 [848]*848Civ.

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236 F. Supp. 3d 843, 2017 WL 629470, 2017 U.S. Dist. LEXIS 22180, Counsel Stack Legal Research, https://law.counselstack.com/opinion/pence-v-gee-group-inc-nysd-2017.